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Loomis v. U.S. Bank Home Mortg.

United States District Court, D. Arizona

December 12, 2012

Dean Patrick LOOMIS, a married man and Beth Loomis, a married woman, Plaintiffs,
U.S. BANK HOME MORTGAGE; U.S. Bank Corp.; U.S. Bank, a bank domiciled in Minnesota; U.S. Bank National Association ND, a bank domiciled in North Dakota; Equifax Credit Information Services, a/k/a Equifax Credit Information Services, a Georgia limited liability company; Experian a/k/a Experian Information Solutions, Inc., an Ohio Corporation, Trans Union LLC, a Delaware limited liability company; Black Corporations 1-100, inclusive; White Partnerships, 1-100, inclusive; and Does 1-100, inclusive, Defendants.

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Kira Ann Schlesinger, Schlesinger Conrad PLLC, Phoenix, AZ, for Plaintiffs.

Craig H. Kaufman, Quarles & Brady LLP, Tucson, AZ, Keasha Ann Broussard, King & Spalding LLP, Atlanta, GA, Katherine A. Klimkowski, Jones Day, Irvine, CA, Christopher Bradley Vynalek, Sarah Roshanne Anchors, Quarles & Brady LLP, Michael Jeffrey Coccaro, Snell & Wilmer LLP, Jonathan Adam Dessaules, Dessaules Law Group, Philip R. Wooten, Philip R. Wooten PC, Phoenix, AZ, Amanda P. Loughmiller, Strasburger & Price LLP, Frisco, TX, for Defendants.


CINDY K. JORGENSON, District Judge.

Pending before the Court are two motions. Defendant U.S. Bank Home Mortgage (" USB" ), filed a Motion to Dismiss on April 13, 2012. (Doc. 8). Defendant Trans Union LLC, (" TransUnion" ) filed a Motion to Dismiss Plaintiff's Complaint under Rule 4(m) or in the Alternative Motion to Dismiss under Rule 12(b)(6) for Failure to State a Claim on April 30, 2012. (Doc. 12).

Defendant Experian Information Solutions, Inc. (" Experian" ) filed an Answer (Doc. 22) on May 31, 2012. Defendant Equifax Information Services, LLC (" Equifax" ) filed an Answer (Doc. 24) on June 22, 2012.

The Court finds these matters appropriate for decision without oral argument. See LRCiv. 7.2(f). After reviewing the moving, opposing, and replying papers, for reasons set forth below the Court grants in part and denies in part Defendants' Motions.

Factual Background [1]

Plaintiffs purchased their house on July 25, 2008 and the deed of trust was recorded by Mortgage Electronic Registration

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Systems. (Doc. 1 at ¶ 16-17). On October 28, 2008 the deed was transferred to USB. Id. at ¶ 18. Plaintiffs went to USB and inquired about refinancing their home, agreeing to consider a Home Affordable Modification Program (emphasis added Id. at ¶ 19). Plaintiffs contend that USB did not disclose to them, that upon consideration of a loan modification, their mortgage status would appear as " modified" and adversely affect the credit information that USB furnished to the consumer reporting agencies; Trans Union, Experian, and Equifax (collectively " consumer reporting agencies" ). Id. at ¶ 19-21.

In November 2010 Plaintiffs attempted to refinance their home through Nova Home Loans but were unsuccessful because of negative comments on their credit report and their low credit score. Id. at ¶ 23. The low credit score and negative comments were allegedly the result of USB furnishing false information to the credit reporting agencies that Plaintiffs were in a modified loan program. Id.

Beginning on November 29, 2010 Plaintiffs initiated a series of conversations with USB regarding their mortgage's status and USB's report to the credit reporting agencies. Id. at ¶ 24-27. USB informed Plaintiffs that the status of the loan was automatically changed to modified after Plaintiffs requested information about the modification program. Id. at ¶ 24, 31. Further, USB's computer record indicated that Plaintiffs were in a partial payment program but confirmed that Plaintiffs had made payments on time and in full every month. Id. at ¶ 27.

On December 3, 2010 USB sent Plaintiffs a letter in which it indicated that it asked the credit reporting agencies to update their record to reflect that Plaintiffs' account was not on a repayment plan. Id. at ¶ 29. On May 12, 2011, Plaintiffs sent a letter to USB, explaining their concerns, and on June 29, 2011 Plaintiffs received a response from USB's Chief Risk Officer Rich Hidy in which USB acknowledged the error, but told Plaintiffs that removal of the comments may not necessarily restore their credit score. The letter further informed Plaintiffs that the credit reporting agencies would not be able to re-adjust their score. Id. at ¶ 32-33. Plaintiffs assert that as a result of USB's error, their credit score dropped approximately 125 points, resulting in a denial of access to additional credit lines and Dean Loomis being denied employment. Id. at ¶ 34-37.

Procedural History

On November 17, 2011, Plaintiffs filed a Complaint alleging seven causes of action against USB and the three credit reporting agencies, Trans Union, Experian, and Equifax.[2]

Plaintiffs allege that USB violated Arizona's Credit Reporting Act, A.R.S. § 44-1695 et seq , and the Arizona Consumer Fraud Act, A.R.S. § 44-1521. Plaintiffs further allege violations of the common law torts of negligent misrepresentation, negligence, defamation, and negligent interference with prospective economic advantage against USB.

Plaintiffs allege the reckless and willful violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681e(b), by Trans Union, Experian, and Equifax for failing and willfully refusing to take reasonable steps to ensure the accuracy of their reports as well as violations of the common law torts of negligence and defamation.

On April 13, 2012, USB filed it's Motion to Dismiss for failure to state a claim. (Doc. 8). Plaintiffs filed their response to

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USB's Motion on April 25, 2012. (Doc. 11). On May 7, 2012, Defendant USB filed its reply. (Doc. 16).

Defendant Trans Union filed a Motion to Dismiss Plaintiffs' Complaint under Rule 4(m), or in the Alternative Motion to Dismiss under Rule 12(b)(6) for Failure to State a Claim on April 30, 2012. (Doc. 12). On May 9, 2012, Plaintiffs filed their response to Trans Union's Motion. (Doc. 17). Trans Union filed a reply on May 16, 2012. (Doc. 20). Defendant Experian filed an Answer to the Complaint on May 31, 2012 (Doc. 22) and Defendant Equifax filed its Answer to the Complaint on June 22, 2012. (Doc. 24).

Dismissal under Rule 4(m)

Trans Union moves for dismissal under Rule 4(m) of the Federal Rules of Civil Procedure. Federal Rule of Civil Procedure 4(m) provides that if a defendant is not served within 120 days after the complaint is filed, the court, on motion or on its own after notice to the plaintiff, must dismiss the action without prejudice against the defendant or order that service be made within a specified time. Fed.R.Civ.P. 4(m).

Plaintiffs' Complaint was filed on November 17, 2011 and Trans Union alleges that it did not receive notice until 144 days later on April 10, 2012. Trans Union argues that " Courts must determine whether good cause for the delay has been shown." Oyama v. Sheehan (In re Sheehan),253 F.3d 507, 512 (9th Cir.2001). However, if there is no good cause, the Court has the discretion to dismiss without prejudice or to extend the time period. Id. (citing Petrucelli v. Bohringer & Ratzinger, GMBH, 46 F.3d 1298, 1305 (3rd Cir.1995)). Rule 4(m) does not " tie the hands of the district court after the 120-day period has expired. Rather, Rule 4(m) explicitly permits a district court to grant an extension of time to serve the complaint after that 120-day period." Mann v. American Airlines, 324 F.3d 1088, 1090-91 (9th Cir.2003). In making a decision to grant an extension without good cause, the Court may consider factors like " a statute ...

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